Bones provide rigid support for the body, mechanical integrity of movement, and protection. Bones also serve as a site of mineral homeostasis as well as the primary site for hematopoiesis. Bone homeostasis is maintained by the balanced action of osteoblasts and osteoclasts. Osteoclasts resorb bone and are derived from hematopoietic precursor cells. The formation and activation of osteoclasts are tightly regulated by osteoblasts, which provide at least two essential factors for osteoclastogenesis, TRANCE and M-CSF. In addition, various stromal cells produce different osteotropic factors that further influence osteoblast-induced osteoclastogenesis. We have recently cloned a novel cell surface receptor, termed OSCAR (osteoclast associated receptor), which is a new member of the leukocyte receptor complex (LRC) proteins. OSCAR expression is restricted to pre- and mature osteoclasts. Expression of the ligand for OSCAR expression is restricted to osteoblasts. Our studies show that addition of a soluble form of OSCAR in co-culture with osteoblasts inhibits the formation of osteoclasts from bone marrow precursor cells in the presence of bone resorbing factors. These results strongly suggest that OSCAR is an important regulator of osteoblast-induced osteoclast differentiation. Genes in the LAC produce immunoglobulin (lg)-like surface receptors and play critical roles in the regulation of both innate and adaptive immune responses. However, OSCAR is the first example of an LRC-encoded protein that is implicated in the regulation of osteoclastogenesis. Therefore, we propose to extend these molecular studies of OSCAR during osteoclast differentiation by pursuing the following specific aims: (1) identifying and characterizing ligand(s) for OSCAR (OSCAR-L), (2) determining how OSCAR expression is regulated during osteoclast differentiation, (3) determining the role of OSCAR in vivo. The knowledge gained from these studies will provide insights into how different molecules cooperate in inducing osteoclast differentiation, and how osteoclasts and osteoblasts communicate to regulate each other's function, which, in turn, may help to make strides in the treatment and prevention of osteoporosis and other bone diseases.